IntheBebavs.SECcase,Coinbase,Inc.hasfiledanamicusbriefsupportingBebaLLCandtheDeFiEducationFundagainsttheU.S.SecuritiesandExchangeCommission(SEC).ThebriefhighlightswhatCoinbasedescribesasan“arbitraryregulation-by-enforcementcampaign”targetingdigital-assetcompanies.ThecryptoexchangealsoclaimstheSEChasfailedtoprovideclearregulatoryguidelinesforthedigitalassetindustry,leavingcompaniesina“Catch-22”situation.
CheckOutContentsofCoinbase’sAmicusBrief
Coinbase,thelargestdigital-assetcompanyintheU.S.,arguedthattheSEChasreverseditsstanceondigitalassetswithoutexplanation.Indeed,ithascreatedanatmosphereofregulatoryuncertainty.TheSECallowedCoinbasetobecomeapubliclytradedcompanyin2021withoutraisingconcernsaboutthelegalityofdigitalassetsonitsplatform.
Theexchangealsonotesthat“theSEC’sthen-DirectorofCorporationFinancepubliclystatedthatadigitalasset‘allbyitselfisnotasecurity.’”However,Coinbasearguesthattheagencyhassinceshifteditsinterpretationandnowcategorizesmostdigitalassetsassecurities.
Accordingtothebrief,“theSEC’sChairnowregularlyassertsthatthe‘vastmajority’ofdigitalassetsaresecurities”despitealackofformalrulemaking.ThebriefcriticizestheSEC’srefusaltoengagein“notice-and-commentrulemaking”toclarifyitsexpectationsfordigitalassets.
Coinbasecontendsthatwithoutarulemakingprocess,digital-assetfirmscannotbeexpectedtocomplywithregulationsdesignedfortraditionalfinancialinstruments.Asnotedinthebrief,theexchangefiledapetitioninJuly2022seekingregulatoryclarityfromtheSECbutreceivednoresponsefornearlyayear.
Today@coinbasefiledanamicusbriefonbehalfof@BebaCollectionand@fund_defitostopthedestructiveregulation-by-enforcementcampaignwagedby@SECGovagainstlaw-abidingAmericancompanies.MostdestructiveofallisthattheSECitselfcan’tevenmakeuptheirmind…pic.twitter.com/qeFdCrdsKn
—paulgrewal.eth(@iampaulgrewal)October28,2024
Initspetition,Coinbasehighlightedthechallengescryptofirmsfaceinattemptingtocomplywithregulationstailoredfor“legacyfinancialinstrumentsmanagedbycentralizedcompanies,ratherthanfordigitalassetsoperatingondecentralizedblockchains.”Moreover,theexchangefurtherarguesthatSECenforcementactionspresupposea“revisionistviewofthesecuritieslaws.”
OtherClaims
ThecompanyclaimstheSEChasfailedtospecifywhichdigitalassetsitconsiderssecuritiesorexplaintheagency’sjurisdictionoversuchassets.Coinbaseasserted,“theagencyhassteadfastlyrefusedtoengageinrulemaking.”Insteaditreliesonenforcementactionsthatmakeitdifficultforcompaniestocomplywithexistingregulations,thebriefstated.
TheexchangesuggestedthattheSEC’sstrategyistoimpose“punitive,retroactivepenalties”oncompaniesfornotregisteringdigitalassetsassecuritiesdespitethelackofclearguidelines.Moreover,Coinbaseclaimstheagency’sapproachhascreatedan“intractabledilemma”forfirmsattemptingtonavigateunclearrules.
“TheSEChasevenopenlydeniedthatithasanobligationtomakecompliancewithitsrulesfeasibleatall,”thebriefstates.Thus,theexchangeurgesthecourttograntdeclaratoryrelief,emphasizingthat“grantingdeclaratoryreliefinthiscasewouldbeacriticalsteponthepathoutofthismorass.”
CoinbaseassertedthattheSEC’senforcementapproachunfairlytargetsdigital-assetfirmsanddisregardsfundamentalprinciplesofregulatoryfairness.Accordingtotheexchange,thisapproachisa“nakedefforttoblockaccesstocryptoasanassetclass”and“securetheextinctionofthisnewtechnology.”
ThebriefconcludesbyaskingthecourttorecognizetheSEC’sstanceasoverreaching.Itstatedthat“thisCourtcanhelprelievethepressureoftheagency’sunlawfulenforcementthreats.”
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